The debt crisis in Greece is getting worse. The government of the country considered to information from SPIEGEL ONLINE, leaving the euro zone. The finance ministers of the monetary union and representatives of the EU Commission will meet on Friday evening secret to a crisis meeting.

Berlin - The economic problems of Greece are huge, almost daily protests against the civil government. Now Prime Minister Georgios Papandreou, apparently sees no other way: According to information from SPIEGEL ONLINE considered his government to abandon the euro and reintroduce its own currency.

Alarmed by the efforts of the European Commission on Friday evening an emergency meeting in Luxembourg has loaded. Apart from the possible withdrawal of Greece from the monetary union and a speedy rescheduling of the country is on the agenda. A year after the outbreak of the crisis in Greece this means for the European Monetary Union an existential turning point - regardless of what option they choose.

Because of the tense situation has been prescribed for the meeting in Luxembourg the highest confidentiality, only the Finance Minister and one close associate may. For Germany participate Finance Minister Wolfgang Schäuble (CDU) and Financial Secretary Joerg Asmussen.

Schäuble wants to hold the Greeks in all circumstances from € outlet. An internal presentation of his ministry, which he took to Luxembourg, warns of the consequences. "It will be a significant depreciation of the new domestic currency against the euro," it states. Was estimated using an exchange rate loss of up to 50 percent can be expected. This debt is growing dramatically in Greece. Schäuble experts expect that the national debt would increase following the devaluation of around 200 percent of gross domestic product. "A restructuring was inevitable," they warn. In plain language: Greece would be bankrupt.

Massive implications for the economy in Europe

While controversy is whether a Euro-Greece's exit would be legally possible at all - in the opinion of legal experts would have to leave the country for the same time the European Union as a whole. It is doubtful whether the other members of the Monetary Union of the government in Athens would preclude a unilateral withdrawal from the euro area actually.

This reveals that the measure had been estimated by the officials Schäuble massive impact on economic life in Europe. "The currency change would trigger a capital flight," they write. Greece may be forced to introduce capital controls. "This would be the fundamental freedoms of the single European market not to bring into line." Moreover, the country would be cut off for many years by the capital market.

Furthermore, would the withdrawal of a country from the monetary union, "damage the trust in the functioning of the euro zone difficult," it said. International investors have to expect that emissions in the future further € members wanted. "This would lead to contagion effects in the euro zone."

The German taxpayer would step dearly

Had a severe impact on the swerving of Greece still ailing banking sector, especially at home. By the currency cut "all of the equity would be eaten up the banking system, the country's banks would be instantly insolvent." But the banks in other countries would suffer. "German and foreign banks would have expected a substantial loss to their demands," says the paper.

The European Central Bank (ECB) would be affected. It would have "a substantial portion of their assets to write off as uncollectible. Among the loans to banks without counting the stocks added to Greek government bonds, which the ECB has bought in recent months. Their volume estimate Schäuble officials to at least 40 billion euros. "Germany would contribute according to its ECB capital share of 27 percent most of the losses."

The bottom line is an exit followed by Greece would bankrupt the country euro-zone countries and their taxpayers are even more expensive. Together with the International Monetary Fund, they have the land grant assistance amounting to 110 billion euros - around half of which was already paid. "The euro-zone countries would have to surrender to the bankruptcy of the country on some of their claims."

And the original version of the article in native English:

The debt crisis in Greece has taken on a dramatic new twist.
Sources with information about the government's actions have informed
SPIEGEL ONLINE that Athens is considering withdrawing from the euro
zone. The common currency area's finance ministers and representatives
of the European Commission are holding a secret crisis meeting in
Luxembourg on Friday night.

Greece's economic problems are massive, with protests against the
government being held almost daily. Now Prime Minister George Papandreou
apparently feels he has no other option: SPIEGEL ONLINE has obtained
information from German government sources knowledgeable of the
situation in Athens indicating that Papandreou's government is
considering abandoning the euro and reintroducing its own currency.

Alarmed by Athens' intentions, the European Commission has called a
crisis meeting in Luxembourg on Friday night. In addition to Greece's
possible exit from the currency union, a speedy restructuring of the
country's debt also features on the agenda. One year after the Greek
crisis broke out, the development represents a potentially existential
turning point for the European monetary union -- regardless which
variant is ultimately decided upon for dealing with Greece's massive
troubles.

Given the tense situation, the meeting in Luxembourg has been
declared highly confidential, with only the euro-zone finance ministers
and senior staff members permitted to attend. Finance Minister Wolfgang
Schäuble of Chancellor Angela Merkel's conservative Christian Democratic
Union (CDU) and Jörg Asmussen, an influential state secretary in the
Finance Ministry, are attending on Germany's behalf.

'Considerable Devaluation'

Sources told SPIEGEL ONLINE that Schäuble intends to seek to prevent
Greece from leaving the euro zone if at all possible. He will take with
him to the meeting in Luxembourg an internal paper prepared by the
experts at his ministry warning of the possible dire consequences if
Athens were to drop the euro.

"It would lead to a considerable devaluation of the domestic currency
against the euro," the paper states. According to German Finance
Ministry estimates, the currency could lose as much as 50 percent of its
value, leading to a drastic increase in Greek national debt. Schäuble's
staff have calculated that Greece's national deficit would rise to 200
percent of gross domestic product after such a devaluation. "A debt
restructuring would be inevitable," his experts warn in the paper. In
other words: Greece would go bankrupt.

It remains unclear whether it would even be legally possible for
Greece to depart from the euro zone. Legal experts believe it would also
be necessary for the country to split from the European Union entirely
in order to abandon the common currency. At the same time, it is
questionable whether other members of the currency union would actually
refuse to accept a unilateral exit from the euro zone by the government
in Athens.

What is certain, according to the assessment of the German Finance
Ministry, is that the measure would have a disastrous impact on the
European economy.

"The currency conversion would lead to capital flight," they write.
And Greece might see itself as forced to implement controls on the
transfer of capital to stop the flight of funds out of the country.
"This could not be reconciled with the fundamental freedoms instilled in
the European internal market," the paper states. In addition, the
country would also be cut off from capital markets for years to come.

In addition, the withdrawal of a country from the common currency
union would "seriously damage faith in the functioning of the euro
zone," the document continues. International investors would be forced
to consider the possibility that further euro-zone members could
withdraw in the future. "That would lead to contagion in the euro zone,"
the paper continues.

Banks at Risk

Moreover, should Athens turn its back on the common currency zone, it
would have serious implications for the already wobbly banking sector,
particularly in Greece itself. The change in currency "would consume the
entire capital base of the banking system and the country's banks would
be abruptly insolvent." Banks outside of Greece would suffer as well.
"Credit institutions in Germany and elsewhere would be confronted with
considerable losses on their outstanding debts," the paper reads.

The European Central Bank (ECB) would also feel the effects. The
Frankfurt-based institution would be forced to "write down a significant
portion of its claims as irrecoverable." In addition to its exposure to
the banks, the ECB also owns large amounts of Greek state bonds, which
it has purchased in recent months. Officials at the Finance Ministry
estimate the total to be worth at least €40 billion ($58 billion) "Given
its 27 percent share of ECB capital, Germany would bear the majority of
the losses," the paper reads.

In short, a Greek withdrawal from the euro zone and an ensuing
national default would be expensive for euro-zone countries and their
taxpayers. Together with the International Monetary Fund, the EU member
states have already pledged €110 billion in aid to Athens -- half of
which has already been paid out.

"Should the country become insolvent," the paper reads, "euro-zone countries would have to renounce a portion of their claims."

Here's how I see it: PM prices are falling because of the "rally" in the USDX because of the falling of the Euro because of the threat from Greece to leave Euro and create it's own worthless paper currency....

Anyone ask the same about Iceland? They told the banksters to shove dreadels up their poop chutes and never looked back....only ones hurt were the banksters dont believe the hype that unless you bow down to the cabal terrible things will happen to you. Theyve got bupkis.

Fuck that statist tyrant traitor Lincoln and his fiat, inflationary Greenbacks. They were in no damned way "the people's money" --- they were the GOVERNMENT'S money, never forget that. Yeah, greenbacks were "the people's money" just like modern senators and congressmen are "the people's representatives". Don't make me laugh!

What we need is the separation of money and the state, NOT merely some tinkering around the edges of the statist, fiat monetary paradigm. Stop the government from issuing ANY form of money --- it no more needs to be involved in dictating what individuals can and cannot exchange among themselves than it "needs" to dictate to us what we can and cannot voluntarily and freely chose to ingest.

The greeks and the germans are damned if they do and damned if they don't. So if they can't agree to a compromise : Haircuts + austerity strapping in Greece (killer blow to population), there is no satisfactory solution. Its a lose-lose by the looks of it.

Will continue to read your stuff and agree where we are today...but curious in regards to how you propose (in general) to protect wealth in this environment? Given the world you paint of unrecognized losses and interwined liabilities...what has worth, value, utility in a deflationary world papered over w/ reflationary policies?

Take for example the REIT's (as you are well aware), these are trading at 2.5yr highs regardless the generally poor CRE and RE enviroment they exist within. The unrecognized losses papered over w/ yields, low rates, and extend/pretend financing has put a floor under these entities. Are they any different than the countries you describe in your presentation but only on a national instead of international level? What is the linkage of the sovereign to the national CRE / RE market?

Wha???? no, Der Spiegel is somewhere between Time and The Economist. Founded by a German POW who spent WWII in Florida and read Time, he wanted to do a German version. They get as many scoops as Rolling Stone with Talibibi (sp?)...

err, No. Der Spiegel is actually quasi reputable -- albiet 'Sturmgeschütz der Demokratie' in some fashion. I've always found them to be somewhat balanced and reasonable; however, there are times they try too 'hard' for a scoop and jump the shark a bit. This might be one of those times.

Greece has restructured (defaulted) many many many times before. The country will go on. Most of the people there would rather default, have a currency that perhaps suffers inflation, and avoid the austerity measures they believe others have imposed on them. They'll turn inward and hunker down in Greece. They won't be the last.

One year after the IMF landed in the country, the people in Greece prepare for a fresh round of mobilisations

"""Tomorrow (May 6th) marks the first anniversary of the IMF, EU and ECB troika arriving in Greece. In response, base unions, the I won’t Pay movement and struggle committees in workplaces call for a demonstration today, May 5th at 7pm at the Propylea in Athens. They also call for participation to the General Strike of May 11th, and for the struggle to continue and to intensify up to May 15th, which is when the new round of cuts is to be announced.

Today, May 5th, also marks the first anniversary of the tragic death of the three bank workers at Marfin bank. In an effort to capitalise on their memory, the neonazis of Golden Dawn have called for a gathering outside the bank this evening, approximately at the same time with the base union demonstration only a few yards away."""

This is nothing more then 'Theater' for the markets because they want the Euro to fall from these high levels. Nobody is buying anything from Germany when the Euro is this strong. I believe it when I see it.

Market News International: BUNDS: No reaction so far in June Bunds on talk that Canary Wharf tube

station in London has been evacuated due to a suspect package. June
Bunds are maintaining earlier 51 tick gains at 123.58.Same source of news as for the Livp street blast.
BULLET: UK: City of London police say they have had no of....
06-May-2011
UK: City of London police say they have had no reports of any incident
in London. Rumours had been swirling the market of a blast in the
Liverpool Street area.

Or.. or... Domino effect of countries leaving Euro cause panic selling in Euro for fear of Bond market collapse and default of debts... No... This will be very bearish near term for the Euro.. Long term for Germany, France, Holland this may be good..

You've been signed up here for over a year. Is this your first trip into the comment section? This site has the best platform for the first amendment I've ever seen online. If you don't like what he says, call him out on it. Don't go whining to Tyler. It makes you look like a bitch.

"Because of the tense situation has been prescribed for the meeting in Luxembourg the highest confidentiality, only the Finance Minister and one close associate may (attend). For Germany participate Finance Minister Wolfgang Schäuble (CDU) and Financial Secretary Joerg Asmussen."

Rumor is probably fake. Even if Greece exits the eurozone, their debt will still be in Euros and even at a 50% haircut they still will not be able to get their deficits under control, and will eventualy have to default outright.

Besides, under the IMF loan treaty signed by G-Pap, the 110bn loan from the IMF cannot be subject to a haircut. Oh and by the way, under article 4 of the loan agreement, in case of default on the IMF loan the creditors have the right to reposess government property including natural resources, land, government buildings etc, etc.

they will just convert the debt to new drachma at an exchange rate twice what it will trade at. All the banks and the IMF will hold new loans in new drachma's and carry them at par since they won't be impaired for accounting purposes.